STOCK BASED COMPENSATION

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Share-Based Payment Arrangement [Text Block]

NOTE 15 – STOCK BASED COMPENSATION

The Company’s 2017 Omnibus Stock Plan (2017 OSP) was adopted by the Company’s BOD on February 24, 2017 and approved by the Company’s shareholders at the May 25, 2017 Annual Meeting of Shareholders. The 2017 OSP enables the Company to grant stock incentive awards to current and new employees, including officers, and to Board members and service providers. The 2017 OSP permits stock incentive awards in the form of Options (incentive and non-qualified), stock appreciation rights, restricted stock, RSUs, performance stock, performance units, and other awards in stock or cash. The 2017 OSP permits the issuance of up to 625,000 shares of our Common Stock in any of the above stock awards. As of March 16, 2023, 403,994 shares remain available for future grant under the OSP.

Starting in 2017, our BOD and Compensation Committee granted RSU awards to the Company’s executive officers under the 2017 OSP. We recognize share-based compensation expense for these RSUs over the vesting period of the RSUs, which is determined by our BOD. Forfeitures of RSUs are accounted for as they occur. Each executive officer was eligible to receive time-based RSUs and performance-based RSUs. The time-based RSUs are computed as a percentage of the executive officer’s base salary based on the closing price of Company common stock on a date set by the BOD, and vest over a three-year period, subject to the executive officer being employed by the Company on the vesting date. The performance-based RSUs are also computed as a percentage of the executive officer’s base salary based on the closing price of Company common stock on a date set by the BOD and vest over a three-year period based on the Company attaining an average Return on Invested Capital (ROIC) over that three-year period. The ROIC target is set by the BOD. Executive officers may earn more or fewer performance-based RSUs based on if the actual ROIC achieved over the time period is more or less than target. Upon vesting of either time-based or performance-based RSUs, the executive officers are issued Common Stock in exchange for the RSUs.

RSUs currently issued and outstanding are as follows:

		Targeted Performance-Based RSUs	Closing Stock Price
	Time-Based RSUs				Vesting Date
Balance at December 31, 2020	7,638	9,611
Issued	3,364	5,247	$	21.90	12/31/2023
Exercised	-	(1,588)	$	23.67	12/31/2020
Exercised	(1,562)	-	$	21.75	12/31/2021
Balance at December 31, 2021	9,440	13,270
Forfeited	(1,685)	(4,325)
Exercised	(4,391)	(4,244)	$	17.18	12/31/2022
Balance at December 31, 2022	3,364	4,701

Option Awards

In 2022, after considerable study, discussion and interaction with our consultants, the Compensation Committee decided to replace RSUs with non-qualified stock Options. The Compensation Committee believes that grants of Options more directly align management long-term equity compensation with increased shareholder value creation at a time when the Company is engaged in significant investment and transformation as part of its long-term strategy. The Compensation Committee also determined to extend the grant of Options include Named Executive Officers, senior employee directors and other employee directors as key members of the Company leadership team and contributors of overall success.

As previously disclosed, the number of Options awarded was computed as a percentage of the employee’s base salary using a Black-Scholes formula using an exercise price equal to the closing price of Company common stock of $21.20 on April 11, 2022. These Options will vest one-third each on April 11, 2023, 2024 and 2025.

		Closing Stock Price
				Vesting Date
	Options
Balance at December 31, 2021	-
Issued	40,577	$	21.20	4/11/2023
Issued	40,583	$	21.20	4/11/2024
Issued	40,583	$	21.20	4/11/2025
Balance at December 31, 2022	121,743

The grant date fair value of employee stock Option awards is determined using the Black Scholes Option-pricing model. The following assumptions were used during the following periods:

	2022 Grants
Exercise Price	$	21.20
Risk-Free Rate of Interest		1.515%
Expected Term (Years)		10
Expected Stock Price Volatility		18.1%
Dividend Yield		2.44%

The following table summarizes the Company’s employee stock Option activity under the 2017 OSP, which was approved by the Company’s shareholders, for the following periods:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Term (Years)	Aggregate Intrinsic Value (in Thousands)
Outstanding as of December 31, 2021	-	$	-	-	$	-
Granted	121,743		21.20	9.28		-
Forfeited	-		-	-		-
Outstanding as of December 31, 2022	121,743	$	21.20	9.28	$	-
Options Vested and Exercisable as of December 31, 2022	-	$	-	-	$	-

The Options had no intrinsic value as of December 31, 2022.

The weighted average grant date fair value per share for employee stock and non-employee Option grants during the twelve months ended December 31, 2022, was $3.24. At December 31, 2022, the total unrecognized compensation related to unvested employee and non-employee stock Option awards granted was $299,434, which the Company expects to recognize over a weighted-average period of approximately 2.28 years.